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Life Insurers Cut Ad Spend Amid GST & Cost Squeeze
12 Jul
Summary
- Life insurers' ad spend dropped nearly 20% in FY26.
- Private insurers slashed publicity by Rs 923 crore.
- GST changes and input tax credit losses impacted spending.
Life insurance companies significantly decreased their advertising and publicity expenditures in FY26 compared to the prior fiscal year. This reduction was primarily driven by private insurers adjusting their strategies following changes in the Goods and Services Tax (GST) and the impact of losing input tax credit (ITC) benefits.
Overall advertisement and publicity expenses fell by 19.8%, amounting to Rs 3,196 crore in FY26 from Rs 3,988.04 crore in FY25. Private insurers accounted for the majority of this decrease, with their spending dropping to Rs 2,512.8 crore. In contrast, the state-owned Life Insurance Corporation of India (LIC) increased its spending.
The government's decision to eliminate GST on retail life and health insurance policies in September led to increased business awareness. However, the simultaneous loss of ITC benefits prompted insurers to revise their spending to meet Expenses of Management (EoM) targets. Leading private players like HDFC Life and ICICI Prudential Life saw substantial reductions in their advertising budgets.
Analysts suggest that increased commission expenses, a major cost for life insurers, might also contribute to the declining trend in advertisement and publicity spending over recent years. This strategic realignment aims to maintain financial stability amidst evolving regulatory and economic conditions.
